BT 2009 Annual Report Download - page 59

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
REPORT OF THE DIRECTORS
57BT GROUP PLC ANNUAL REPORT & FORM 20-F
REPORT OF THE DIRECTORS
REPORT ON DIRECTORS’ REMUNERATION
The Report on directors’ remuneration is divided into the
following sections:
Remuneration policy (not audited)
(i) Role of the Remuneration Committee
(ii) Remuneration principles
(iii) Remuneration in 2008/09 and 2009/10
(iv) Other matters
Executive share ownership
Pensions
Other benefits
Directors who have left the Board
Service agreements
Outside appointments
Non-executive directors’ letters of appointment
Non-executive directors’ remuneration
Directors’ service agreements and contracts of appointment
Directors’ interests
Performance graph
Remuneration review (audited)
Directors’ emoluments
Former directors
Loans
Pensions
Share options
Share awards under long-term incentive plans
Vesting of outstanding share awards and options
Deferred Bonus Plan awards
Share awards under the Employee Share Investment Plan
and Allshare International
Remuneration policy
This part of the Report on directors’ remuneration is not subject
to audit.
Shareholders will be asked to vote on this Report at the
2009 AGM.
(i) Role of the Remuneration Committee
The Remuneration Committee , under delegated authority from the
Board, agrees the framework for the remuneration of the Chairman,
the executive directors and certain senior executives. This includes
the policy for all cash remuneration, executive share plans, service
contracts and termination arrangements. The Committee approves
changes to the executive share plans and recommends to the Board
any changes which require shareholder approval. The Committee
also determines the basis on which awards are granted under the
executive share plans to executives reporting to the senior
management team.
The Board has reviewed compliance with the Combined Code on
reward-related matters and confirms that the company has
complied with all aspects. The Chairman, Sir Michael Rake, is a
member of the Committee, in accordance with the provision of the
Combined Code permitting a company chairman to be a member of,
but not chair, the remuneration committee.
The terms of reference of the Committee are available on the
company’s website at www.bt.com/committees.
The Committee met five times during 2008/09. In addition to the
Chairman, the members of the Committee are non-executive
directors. The Deputy Chairman, Maarten van den Bergh, has been
chairman of the Committee since October 2006 and the other
members who served during 2008/09 were:
Sir Michael Rake
Matti Alahuhta
Eric Daniels (appointed 8 May 2008)
Deborah Lathen
Carl Symon
In addition, the Chief Executive is invited to attend meetings,
except when it would be inappropriate for him to be there, for
example, when his own remuneration is discussed. Non-executive
directors who are not members of the Committee are entitled to
receive the papers discussed at meetings and the minutes.
The Committee has received advice during the year from
independent remuneration consultants, Kepler Associates, who
were appointed by the company. Kepler advises both the Committee
and the company and attends Committee meetings when major
remuneration issues are discussed. They provide no other services to
the company. The Committee also regularly consults the Chief
Executive, the Group Finance Director, the Group HR Director, the
Director Reward and Employee Relations, and the Company
Secretary.
(ii) Remuneration principles
BT’s policy is to reward its senior executives competitively, taking
account of the performance of the individual lines of business and
the company as a whole, remuneration of other FTSE 30 companies
and the competitive pressures in the global information and
communications technology (ICT) industry. This ICT comparison is
important as an increasing proportion of BT’s revenues is derived
from networked IT services and broadband.
The Committee has amended the policy such that base salaries
are typically positioned at levels below the median of the
comparator group, with the remuneration package as a whole
(basic salary, annual bonus – in cash and deferred shares – and the
expected value of any long-term incentives) having the potential to
deliver upper quartile rewards only for sustained and excellent
performance.
A significant proportion of the total remuneration package –
bonuses and long-term incentives – is variable and is linked to
corporate performance. The performance targets are reviewed
regularly to ensure that they are challenging.
In setting remuneration of the directors, the Committee takes
into account the pay and employment conditions of employees
elsewhere in the group.
The Committee is satisfied that the incentive structure for senior
executives does not raise environmental, social and governance
risks by inadvertently motivating irresponsible behaviour. As
members of the Board, all Committee members receive and review
an annual corporate responsibility report detailing the way in which
the company manages social, ethical and environmental issues. The
Committee for Responsible and Sustainable Business , chaired by Sir
Michael Rake, meets three or four times each year.